The pandemic has led to a rush in the crypto race as more and more people became open to cryptocurrencies. BTC (Bitcoin) prices and other altcoins have achieved an all-time high. Also, there are more governments and institutional investors considering cryptos.
Gone are the days where many governments did not understand crypto and associated it with money laundering. The approach has changed, and governments are working on implementing digital versions of their national currencies as they have seen their importance. China, Hong Kong, and Singapore are the leading countries in terms of cryptocurrency adoption. They have a high number of exchanges and mining activities.
There are still some countries such as India, which are not so aggressive in the crypto space despite the trend. The government of India has been the main hindrance with its laws on cryptocurrencies. This is despite the thriving crypto community in India. The country has a history of having currency issues. Recently, the Reserve Bank of India banned rupee transactions though the Supreme Court revoked the decision.
Some of the key steps that India can take to ensure it does not lose its ground on the crypto race include:
Have the right policies
It’s no doubt that cryptocurrencies are here to stay. That means that the regulations in India should consider to come up with the right policies for cryptocurrencies that addresses common concerns such as money laundering, taxation, and financial crimes. That should apply to other corporations and crypto firms that have Indian stakeholders.
Build a thriving ecosystem
One of the ways that the government can build a thriving ecosystem is by setting up crypto sandboxes, just like other countries have done. This will ensure that entrepreneurs have a safe space that they can do experiments. Startup agencies can collaborate with accelerators and corporations to build up the sandbox. Financial institutions such as banks can also get involved. This will give way to attracting the right entrepreneurs to solve the problems they are facing. It will not only encourage innovation but will also help shorten the product development life cycle.
Work on a national digital currency (CBDC)
Contrary to expectation, cryptocurrencies are not only about technology and economics, but they also involve politics and game theory. One of the ways of solving this is by introducing a national digital currency as China did. China embarked on a digital yuan project which will be used across the country and on different platforms such as Alibaba. China plans to extend it to belt-and-road initiative partners as its main currency in place of the dollar.
China is not the only one embracing CBDC. Iran and Russia are also in the band in an attempt to steer away from the dollar centric world where you need the SWIFT network.
Even though a majority of the crypto community is against CBDC’s since they are centralized, they can help in fiscal policy tools. That is why the International Monetary Fund believes that CBDC’s can play a huge role when it comes to cross-border remittances, transparency, and currency substitution. Pakistan’s Securities and Exchange Commission made a draft regulation on CBDCs in support of this.
From the current global trend, it is just a matter of time, and all governments will be exploring ways of integrating cryptocurrencies into their systems. Its spread may take some time since it has technological, political, and cultural aspects tied to it. From the different conversations going on, crypto is slowly but surely taking root in different spaces. Everyone will soon use it in the future.